Government Budget: Objectives and Components

Study Notes

The text discusses the importance of Government Budget and its objectives in managing resources effectively.
Government Budget is an annual statement outlining projected expenditures and receipts for the upcoming fiscal year.
The objectives of the budget include Reallocation of Resources, reducing income inequalities, ensuring economic stability, managing public enterprises, and reducing regional disparities.
To achieve these objectives, the government may impose taxes on harmful goods, provide subsidies to the poor, and focus on increasing GDP through effective policies.
The components of the budget include receipts (revenue and capital) and expenditures, where revenue receipts are recurring in nature and capital receipts are occasional and non-recurring.
Revenue receipts do not create liability or reduce assets, while capital receipts either create liability or reduce assets.
Examples of revenue receipts include taxes and fines, while capital receipts include disinvestment and recovery of loans.
Tax revenue and non-tax revenue are two types of revenue receipts that the government collects from various sources.- Tax refers to the total of receipts from taxes and other duties imposed by the government, collected in various forms such as toll tax, GST, and income tax.
There are two main types of taxes in the country: direct taxes (on income and property) and indirect taxes (on goods and services).
Direct taxes are imposed on individuals and companies' income and property, while indirect taxes are on goods and services.
Direct taxes have a progressive nature as income increases, tax increases, whereas indirect taxes like GST are proportional based on purchases.
Direct tax burden cannot be shifted, while indirect tax burden can be shifted to the final users.
Direct tax coverage is limited, with no tax for individuals with up to 7 lakhs annual income, while GST is applicable to everyone.
Examples of direct taxes include income tax and wealth tax, while GST is an example of an indirect tax.
Non-tax revenue receipts include interest earned on loans, government profits, dividends, fees, fines, escheat, forfeiture, special assessment, and gifts/grants.
Capital receipts increase the government's liability by borrowing money, recovering loans, disinvestment, and small savings.
Expenditures are categorized into revenue expenditure (daily recurring expenses) and capital expenditure (non-recurring expenses creating assets or reducing liabilities).

Description

Learn about the importance of Government Budget, its objectives, components, and how it helps manage resources effectively. Explore topics like reallocation of resources, reducing income inequalities, types of taxes (direct and indirect), revenue and capital receipts, and expenditure categorization.